South Sudan signs deal to extend oil exploration, production for 3 blocks

By Julius Uma

September 10, 2018 (JUBA) - South Sudan has signed an agreement to extend oil exploration, production agreements for three blocks.

South Sudan’s petroleum minister Ezekiel Gatkouth makes opening remarks at the Oil and Power conference in Juba, October 16, 2017 (APO)

The country’s Petroleum ministry on Monday said it had extended the contracts for the state-run Nile Petroleum Company (Nilepet), China National Petroleum Corporation (CNPC), Malaysia’s Petronas and India’s Oil and Natural Gas Corporation (ONGC Videsh).

The new agreement, it said, would allow the three foreign oil companies to continue pumping oil in the Unity oilfields for six years.

The three oil companies have been producing crude for the war-torn country since South Sudan gained independence in July 2011.

According to South Sudan petroleum minister, Ezekiel Lol Gathkuoth the recent extension of the exploration production sharing agreement (EPSA) and the transitional agreement (TA) provides a win-win partnership between the government and the oil companies because it addresses issues of environmental protection, infrastructure development and decommissioning of oil infrastructure.

"This extension of the agreement is good because this is money for the people of South Sudan and for the country. It is a win-win for all of us," said Gatkouth.

He further said the new agreement would be vital in boosting South Sudan’s oil production and help revive its ailing economy after more oil fields reopened in the northern parts of the country last month.

"The economy of the country will be definitely improving so that we have more developmental projects for the country and for the people," stressed the minister.

South Sudan got the lion’s share of the oil when it split from Sudan in July 2011, but it’s only export route is through Sudan, giving Khartoum leverage and leading to ongoing pricing disputes.

However, since its independence, South Sudan has relied on oil for all its incomes, a situation that has significantly compounded the ongoing political and economic instability due to fall in crude oil prices.

Last week, South Sudan said it expects to reach peak oil output of 350,000 barrels per day (bpd) by mid-2019 as production ramps up at fields that were offline due to violence.

South Sudan seceded from neighbouring Sudan in July 2011 when output peaked at 350,000 bpd, prior to the outbreak of a civil war in the country two years later.